debt neutrality, finite horizons, and private savings behavior

Abstract or Table of Contents

abstract: the paper has two purposes: first, to study the quantitative importance of deviations from debt neutrality in a multiperiod finite-horizon economy. second, to provide new empirical evidence on the validity of the debt neutrality proposition based on a near-century of time series evidence for the u.s. and the u.k. the results suggest that the behavior of private savings rates outside war-periods is not consistent with debt neutrality, and that the assumption of finite horizons is unlikely to account for this finding.;